August 2, 2005
MAIL STOP 3561
via U.S. mail and facsimile
Douglas Humphreys, President
Morgan Creek Energy Corporation
10120 S. Eastern Avenue, Suite 200
Henderson, NV 89052
Re: Morgan Creek Energy Corporation
Form SB-2, Amendment 1 filed June 14, 2005
File No. 333-123989
Dear Mr. Humphreys:
We have the following comments on your filing. Where
indicated,
we think you should revise your document in response to these
comments. If you disagree, we will consider your explanation as
to
why our comment is inapplicable or a revision is unnecessary.
Please
be as detailed as necessary in your explanation. In some of our
comments, we may ask you to provide us with supplemental
information
so we may better understand your disclosure. After reviewing this
information, we may or may not raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
General
1. Fully review your website in order to determine if any comments
regarding the registration statement are also applicable to the
website. If so, please comply with the comment(s). In addition,
delete any inaccuracies on your website and resolve any
inconsistencies with your registration statement. For example:
"We
plan to continue building and increasing a strategic base of
proven
reserves and production base within Oklahoma`s Arkoma Basin. (our
emphasis)." We might have further comment in this regard.
About This Prospectus, page 5
2. We repeat our prior comment 4 which stated: "The second from
the
last sentence of this section is incomplete. Please complete it."
Prospectus Summary, page 5
Our Business, page 5
3. Disclose the original dates of the leases.
Summary of Financial Data, page 7
4. Revise to correct the amount indicated for working capital at
March 31, 2005. Also correct the reference under Liquidity and
Capital Resources on page 23.
Risk Factors, page 8
5. Revise to correct the reference to the independent auditor`s
report accompanying the March 31, 2005 financial statements since
there is no such report. Instead, it appears you meant the report
that accompanies the December 31, 2004 audited financial
statements.
6. In the first paragraph of this section please delete the
following: "The risks described below are all of the material
risks
that we are currently aware of that are facing our company."
Sales of a substantial number of shares of our common stock into
the
public market ...., page 9
7. Please resolve the apparent discrepancy between the following
two
statements: "When this registration statement is declared
effective,
the Selling Stockholders will be able to resell up to 4,167,700
shares of our common stock."; and "Currently there are no shares
of
our common stock eligible for resale pursuant to Rule 144."
8. We note your response to our prior comment 10. Supplementally
provide Fletcher`s letter. File as an exhibit Fletcher`s written
consent to the use of its name in the registration statement.
The oil and gas industry in which we operate involves ...., page
12
9. We repeat our prior comment 13, which stated: "Please briefly
identify the risks in the heading."
Oil and gas operations are subject to comprehensive regulation
.....,
page 14
10. We have reviewed your response to our prior comment 15.
Please
expand the disclosure regarding insurance to explain in greater
detail why the company believes it needs no insurance, including
liability insurance, for its properties at the present time.
Also,
explain what is covered by the insurance that the contract
operators
generally obtain. In addition, please reference the following
statement: "Once business operations have advanced to a point
that
requires insurance by the Company directly, the company will seek
insurance coverage in amounts required for standard industry
perils
in the scale and scope required in the circumstances." Disclose
the
criteria you will use to determine when you need insurance and the
amount required.
Use of Proceeds, page 16
11. We repeat our prior comment 18, which stated: "Fully disclose
in
this section your registration obligations to the selling
stockholders."
Management`s Discussion and Analysis, page 17
Plan of Operation, page 17
12. At the end of the second paragraph of this section and on your
website you have stated: "In addition, the Company has capital
resources in place for other anticipated administrative and other
costs for a total of 12 months." This is not consistent with
other
disclosure in this section, namely: "Our ability to continue to
expand land acquisitions and explore drilling opportunities after
the
next 6 months of operations is dependent on adequate capital
resources being available and further sources of debt and equity
being obtained ...." Please resolve this apparent discrepancy in
the
prospectus and the website.
13. Liquidity and Capital Resources, page 24
14. Revise to correct the reference to December 31, 2003. In
addition, please update the discussion through March 31, 2005 and
any
subsequent updates to the financial statements.
15. Provide significantly greater detail regarding the expenses
you
have described in the second from the last paragraph of this
section
in response to our prior comment 22. For example, for the
payments
of $50,000 to International Market Trend and $200,000 to American
News Publishing, Inc., please provide a separate cost for each
item
identified and describe in greater detail what service(s) were
provided with regard to each item. Also, state, for each item
whether additional services and expense are necessary in order for
you to use the service effectively. In addition, identify the
other
"administrative identity related items" that International Market
Trend provided for you and disclose, for each, the information
requested above. Finally, detail how such expenditures work to
promote the company`s business of exploration and production of
natural resources, and detail any affiliations between any of the
recipients of such funds from the company and the company, any
officer, director, stockholder of the company, or any affiliate of
the above. We may have further comment.
Description of Business, page 26
Current Business Operations, page 26
16. Ensure that you have addressed each requirement of the lease
for
which the deadline has arrived. State whether you met the
deadline
and, if not, how you resolved the matter. Provide greater detail
about the material terms of the lease with regard to "held by
production." Also, in any disclosure about costs which consist of
a
price per acre, please include the number of acres involved,
including the number of acres to be used in calculating the
"$25.00
per year per net royalty acre" when you do not meet the "held by
production" requirements.
Current Business Operation, page 26
17. Ensure that, when you discuss the leases, you specify whether
you
are referring to the Hurley lease or the Chapman lease, or both.
Summary of Terms of Leases, page 27
18. In this section identify each lease by the name "Hurley" or
"Chapman." Expand the summary to include an explanation targeted
to
lay persons of each line item. Ensure that all material terms of
each of the leases is included in the disclosure.
Directors, Executive Officers, Promoters and Control Persons, page
32
Business Experience, page 32
19. In the first full paragraph on page 33, please clarify the
company names and clarify whether there are two different
companies
or one company and its former names and/or predecessors in the
following sentence: "Mr. Atkins is also currently President
(since
Dec/2001) and Director (since 1998) of coal bed methane and
Barnett
Shale gas exploration and development company, Lexington
Resources,
Inc., formerly `Intergold Corporation`."
Report of Independent Registered Public Accounting Firm, page 44
20. We noted the following issues with the audit report:
* The first sentence of the report does not specify that the
balance
sheet was audited. This appears to be a typographical error.
* The second paragraph should state the engagement was performed
in
accordance with "the standards of the Public Company Accounting
Oversight Board (United States)," as discussed in PCAOB Auditing
Standard No. 1.
* The conclusion in the third paragraph does not state the
financial
statements present fairly, in all material respects, the entity`s
financial position, results of operations, and cash flows in
conformity with accounting principles generally accepted in the
United States.
Please provide a revised audit report that meets the criteria in
AU
Section 508 and PCAOB Auditing Standard No. 1.
Note 3 - Oil and Gas Property, page 52
21. We note your response to our prior comment 42. Please tell us
the date and terms of the first sale of stock to an independent
third
party. Also, please tell us management`s basis for recording the
issuance of the 6,000,000 shares with a debit to accumulated
deficit
for $600,000, and a corresponding credit to APIC and Common Stock.
Reference the authoritative accounting guidance. Also, tell us
what
you mean by "the related party vendor`s cost," as disclosed in
Note
3. Revise Note 3 and MD&A as appropriate to clarify the
accounting
treatment.
22. Revise to reconcile the December 17, 2004, agreement date
disclosed in Note 3 with the date of November 19, 2004 disclosed
in
the statement of stockholders` equity and on pages 31 and 35.
Outside Back Cover Page
23. We repeat our prior comment 43. Please place the prospectus
delivery requirements on the outside back cover page instead of
the
front cover page.
Recent Sales of Unregistered Securities, page 66
24. Please disclose whether or not you have met the requirements
of
Rule 903(a) and Rule 903(b)(3)(i) and (iii)(B)(2) of Regulation S
for
each of the private offerings. Please see Rule 902(g) for the
definition of "offering restrictions" and Rule 902(h) for the
definition of "offshore transaction." In addition, disclose the
identity of each purchaser under the listed transactions and
ensure,
to the extent applicable, that each of the transactions involving
the
selling securityholders listed on pages 39-40 of the prospectus is
discussed in full herein.
Closing Comments
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Donald Wiland at (202) 551-3392 if you have
questions regarding comments on the financial statements and
related
matters. Please contact Susann Reilly at
(202) 551-3236 with other questions.
Sincerely,
John Reynolds
Assistant Director
Office of Emerging Growth Companies
cc: William O`Neal, Esq.
By facsimile (480) 816-9241
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Douglas Humphreys, President
Morgan Creek Energy Corporation
August 2, 2005
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